Two months ago, the global economy was finally moving in the right direction. Growth was accelerating. Inflation was falling. The IMF was preparing to upgrade its outlook for 2026.
Then the war started.
This week the IMF released its April World Economic Outlook under the title “Global Economy in the Shadow of War.” Global growth is now forecast at 3.1% for 2026, down from 3.4% before the conflict began. Inflation is rising to 4.4%. The Middle East and Central Asia region has been slashed to 1.9% growth. Iran itself is contracting 6.1% this year.
The IMF laid out three scenarios. A short war keeps growth at 3.1%. A longer disruption drops it to 2.5%. If the war extends into 2027 global growth falls to 2.0%, close to recession territory. It has only happened four times since 1980.
At the centre of it all is the Strait of Hormuz. Twenty percent of the world’s oil passes through it. Right now, it is blocked. The IMF’s message to the world is straightforward. End the war. Everything else is damage control.
Sources: IMF · Al Jazeera · Bloomberg · UNCTAD
